BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON EDUCATION
                              Senator Carol Liu, Chair
                                2015 - 2016  Regular 

          Bill No:             AB 2506            
           ----------------------------------------------------------------- 
          |Author:    |Thurmond                                             |
          |-----------+-----------------------------------------------------|
          |Version:   |May 27, 2016                             Hearing     |
          |           |Date:    June 22, 2016                               |
           ----------------------------------------------------------------- 
           ----------------------------------------------------------------- 
          |Urgency:   |No                     |Fiscal:    |Yes              |
           ----------------------------------------------------------------- 
           ----------------------------------------------------------------- 
          |Consultant:|Lynn Lorber                                          |
          |           |                                                     |
           ----------------------------------------------------------------- 
          
          Subject:  Student financial aid:  Chafee grant awards


            SUMMARY
          
          This bill provides that an eligible current or former foster  
          youth is entitled to receive a Chafee grant award, and requires  
          postsecondary education institutions to meet eligibility  
          requirements to receive Chafee funds, similar to existing  
          provisions of the Cal Grant program. 

            BACKGROUND
          
          Existing law:

          1)   Establishes the California Student Aid Commission for the  
               purpose of administering specified student financial  
               programs. 
          (Education Code § 69510, et seq.)

          2)   Establishes requirements for postsecondary education  
               institutions to participate in the Cal Grant program, and  
               requires, for the 2012-13 and subsequent academic years, an  
               institution to maintain a graduation rate above 30% and a  
               three-year cohort student loan default rate of less than  
               15.5%.  (EC § 69432.7)

          3)   Establishes the federal John H. Chafee Foster Care  
               Independence Program to provide, among other benefits,  
               education and training vouchers to qualifying current and  







          AB 2506 (Thurmond)                                      Page 2  
          of ?
          
          
               former foster youth.  (United States Code, Title 42, § 677)

           ANALYSIS
          
          This bill provides that an eligible current or former foster  
          youth is entitled to receive a Chafee grant award, and requires  
          postsecondary education institutions to meet eligibility  
          requirements to receive Chafee funds, similar to existing  
          provisions of the Cal Grant program.  Specifically, this bill:

          Chafee grant entitlement

          1)   Provides that, beginning with the 2017-18 academic year, a  
               current or former foster youth is entitled to a Chafee  
               grant award.

          2)   Requires the California Student Aid Commission (CSAC) to  
               allocate the Chafee award if the current or former foster  
               youth meets both of the following criteria:

                    a)             He or she meets the existing Chafee  
                    grant requirements.  (See #2 in Comments.)

                    b)             He or she submits a Free Application  
                    for Federal Student Aid and a Chafee grant application  
                    between January 1 and September 2 each year for the  
                    academic year beginning in the fall of that calendar  
                    year.

          3)   Provides that the amount of any individual Chafee grant  
               award depends on the cost of attendance at the qualifying  
               institution at which the student is enrolled.  

          4)   Prohibits the award amount from exceeding the amount of the  
               calculated financial need for each student.

          Standards for qualifying institutions

          5)   Establishes the standards for postsecondary educational  
               institutions to be classified as qualifying institutions  
               for the purposes of the Chafee Educational and Training  
               Voucher program, to the extent permitted by federal law.

          6)   Requires the CSAC to certify annually by October 1 a  








          AB 2506 (Thurmond)                                      Page 3  
          of ?
          
          
               postsecondary educational institution's latest three-year  
               cohort default rate and graduation rate as most recently  
               reported by the United States Department of Education.  

          7)   Requires the following standards to apply in determining an  
               institution's eligibility for the use of initial and  
               renewal Chafee grant awards by its students:

                    a)             Provides that an otherwise qualifying  
                    institution with a three-year cohort default rate that  
                    is 15.5% or higher, as certified by the CSAC, is  
                    ineligible for the use of Chafee grant awards.

                    b)             Authorizes an otherwise qualifying  
                    institution that becomes ineligible to regain  
                    eligibility for the subsequent academic year after  
                    satisfying a) - d).  This bill provides that an  
                    institution is to immediately regain its eligibility  
                    if the United States Department of Education corrects  
                    or revises the institution's three-year cohort default  
                    rate or graduation rate such that the requirements in  
                    a) - d) are met.

                    c)             Provides that an otherwise qualifying  
                    institution for which no three-year cohort default  
                    rate or graduation rate has been reported is  
                    provisionally eligible for Chafee grant awards until a  
                    three-year cohort default rate or graduation rate has  
                    been reported for the institution by the United States  
                    Department of Education.

                    d)             Provides that, beginning with the  
                    2017-18 academic year and annually thereafter, an  
                    otherwise qualifying institution with a graduation  
                    rate of 30% or less for students taking 150% of less  
                    of the expected time to complete 
                    degree requirements, as reported by the United States  
                    Department of Education and certified by the  
                    California Student Aid Commission (CSAC), is  
                    ineligible for the use of Chafee grant awards.

          8)   Exempts from these standards institutions:

                    a)             With 40% or less of undergraduate  








          AB 2506 (Thurmond)                                      Page 4  
          of ?
          
          
                    students borrowing federal student loans, using  
                    information reported to the United States Department  
                    of Education for the prior two academic years.

                    b)             Located outside of California.

          9)   Provides that provisions relative to the standards for  
               qualifying institutions are not to preclude an eligible  
               Chafee grant recipient who chooses to attend an institution  
               outside of California from using Chafee funds at that  
               institution.

          California Student Aid Commission

          10)  Requires the California Student Aid Commission (CSAC) to do  
               all of the following:

                    a)             Notify initial or renewal recipients  
                    seeking to attend, or attending, an institution that  
                    is ineligible for Chafee grant funds that the  
                    institution is ineligible for the use of initial  
                    awards for the academic year for which the student  
                    received the initial award.

                    b)             Provide initial and renewal Chafee  
                    grant recipients seeking to attend, or attending, an  
                    institution that is ineligible for Chafee grant awards  
                    with a complete list of all California postsecondary  
                    educational institutions at which the student would be  
                    eligible, pursuant to state standards for qualifying  
                    institutions, to receive an unreduced Chafee grant  
                    award.

          Miscellaneous

          11)  States legislative findings and declarations relative to  
               limited access to the Chafee grant, the importance of  
               quality education, and the poor educational outcomes for  
               foster youth.  

          STAFF COMMENTS
          
          1)   Need for the bill.  According to the author, "AB 2506 is  
               seeking to address the low rates of college persistence and  








          AB 2506 (Thurmond)                                      Page 5  
          of ?
          
          
               completion among youth in foster care.  There are two  
               deficiencies in current law: the first is a lack of  
               financial support for current and former foster youth who  
               are attending college.  Unfortunately, the funding  
               available to the Chafee Education and Training Vouchers  
               (ETV) is inadequate to meet the current demand.  In the  
               2014-15 school year, 4,609 students applied for the Chafee  
               and were determined eligible; however, 1,115 eligible  
               applicants did not receive a grant.  The second deficiency  
               is current law is the ability to use the Chafee ETV at  
               postsecondary institutions that do not meet baseline  
               performance measures, including acceptable rates of  
               graduation or loan default payment.  Studies have shown  
               that these often for-profit colleges market specifically to  
               vulnerable student populations, including veterans and  
               foster youth, and use their limited financial aid with  
               little chance of earning a degree."

          2)   Chafee eligibility requirements.  To qualify for a Chafee  
               Education and Training Voucher (ETV), students must:

               a)        Be a current or former foster youth, with  
                    dependency established or continued by the court  
                    between ages 16-18.

               b)        Be under the age of 22 years as of July 1 of the  
                    award year.

               Students must fill out the Free Application for Federal  
               Student Aid, or California Dream Act Application, and the  
               California Chafee grant application.  Currently, there is  
               no application deadline or guarantee of funds, and  
               applications are processed on a rolling basis until all  
               funds are expended.  This often results in students not  
               learning whether they received a grant until well into the  
               school term.

               The Chafee ETV is not an entitlement, unlike the Cal Grant  
               program.  This bill make the Chafee grant an entitlement in  
               California; an eligible student would be awarded a grant,  
               regardless of sufficient or available funding. 

          3)   Qualifying institutions.  The Chafee ETV may be used at any  
               eligible California college as well as colleges in other  








          AB 2506 (Thurmond)                                      Page 6  
          of ?
          
          
               states.  In California, students may use the Chafee grant  
               at career and technical schools, California Community  
               Colleges, the California State University, the University  
               of California, independent colleges, and private colleges.

          Existing law requires postsecondary education institutions to  
               maintain, in order for students to use Cal Grants to attend  
               those institutions, a graduation rate above 30% and a  
               three-year cohort student loan default rate of less than  
               15.5%.  This bill requires institutions to meet the  
               standards established in statute for participation in the  
               Cal Grant program.

          The changes proposed by this bill could affect existing Chafee  
               grant recipients if they attend an institution that does  
               not meet the requirements for qualifying institutions.   
               Staff recommends an amendment to add a grandfather clause,  
               thereby allowing existing Chafee recipients to continue  
               attending their current institution.

          4)   Administration of the Chafee.  The California Student Aid  
               Commission administers the Chafee ETV, which is funded by  
               federal and state monies, through a Memorandum of  
               Understanding (MOU) with the California Department of  
               Social Services.  Staff recommends an amendment to state  
               intent that the requirements of this bill supplement the  
               existing requirements of the MOU, thereby ensuring issues  
               such as maximum program awards are addressed.

          5)   Funding.  In California, the Chafee ETV provides up to  
               $5,000 in grants to current and former foster youth.  The  
               budget for the program is approximately $11.5 million,  
               which is evenly split between federal funds ($5.6 million)  
               and the state General Fund.  State funding for the program  
               is accounted for in the Department of Social Services  
               budget.  The 2016 Budget Act includes an additional $3  
               million for the Chafee ETV.

          The maximum Chafee grant is $5,000 per academic year; the  
               average awarded grant in 2014-15 was $3,251.  The program  
               serves about 2,228 California students.

          6)   Fiscal impact.  According to the Assembly Appropriations  
               Committee, this bill imposes:








          AB 2506 (Thurmond)                                      Page 7  
          of ?
          
          

               a)        Estimated additional General Fund costs of $4  
                    million in the first year for entitlement program  
                    awards, based on 1,230 additional awards and an  
                    average award of $3,234.  There were 1,115 eligible  
                    applicants that, under the current Chaffee program,  
                    did not receive an award in 2014-15 due to  
                    insufficient resources.  In addition, the California  
                    Student Aid Commission (CSAC) indicates that another  
                    845 applicants were deemed ineligible from due to lack  
                    of a single piece of required information.  CSAC  
                    expects that new administrative procedures soon to be  
                    implemented to assist such applicants will increase  
                    eligibility, which would lead to an entitlement award.  
                     Annual costs would increase to around $11 million in  
                    the third year and thereafter.

               b)        Administrative costs (General Fund) to the CSAC  
                    of about $60,000 one-time and $270,000 ongoing for  
                    four positions to implement the entitlement program.   
                    The CSAC indicates that the Chafee program is  
                    relatively labor intensive due to the population it  
                    serves and the need to coordinate among various  
                    agencies.

            SUPPORT
          
          Alameda County Court Appointed Special Advocates
          California Alliance of Child and Family Services
          California CASA
          California Community Colleges Chancellor's Office
          California State Student Association
          California Student Aid Commission
          Casa de Amparo
          First Place for Youth
          Fred Finch Youth Center
          iFoster
          John Burton Foundation for Children Without Homes
          Los Angeles Area Chamber of Commerce
          Mission College, Student Enrollment & Financial Services
          National Association of Social Workers, California Chapter
          National Center for Youth Law
          New Alternatives, Inc.
          Skyline College, Financial Aid Office








          AB 2506 (Thurmond)                                      Page 8  
          of ?
          
          
          University of Southern California
          VOICES Youth Centers of California
          Individuals

           OPPOSITION
           
           None received.

                                      -- END --